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Consider an investor who, on January 1, 2019. purchases a TIPS bond with an original principal of $120,000, an 8 percent annual for 4 percent

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Consider an investor who, on January 1, 2019. purchases a TIPS bond with an original principal of $120,000, an 8 percent annual for 4 percent semiannual) coupon rate, and 15 years to maturity. a. If the semiannual inflation rate during the first six months is 0.3 percent, calculate the principal amount used to determine the first coupon payment and the first coupon payment (paid on June 30, 2019). b. From your answer to part a, calculate the inflation-adjusted principal at the beginning of the second six months. c. Suppose that the semiannual inflation rate for the second six-month period is 12 percent Calculate the inflation-adjusted principal at the end of the second six months on December 31, 2019) and the coupon payment to the investor for the second six-month period

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